Indian Manufacturing Sector

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arshyam
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Re: Indian Manufacturing Sector

Postby arshyam » 24 Apr 2021 15:45

Yes, beyond a point, this repeated complaining about not having our own tech is irritating. Yes, this is well known on a forum like BRF. What is the way forward? That would be more constructive.

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Re: Indian Manufacturing Sector

Postby csaurabh » 27 Apr 2021 14:08

There is no silver bullet. India's industries must learn to respect R&D and make good payments for R&D. Then results will improve over period of decades. Most importantly they need to be convinced that R&D is profitable and only way to advance in the modern age.

A start should be made by India's leading industries. Bollywood is a very rich industry, but is totally reliant on imported technology when it comes to camera systems, lighting, computer animation, you name it. Same with Ambani's reliance.. they need to develop indigenous telecom equipment rather than passing of some other country stuff under the name of joint ventures.

To be fair there is nothing wrong per se with services industries. Vast majority of the businesses even in the west would be a services type. The difference is the presence of technology companies which is virtually absent in India.

We need to be able to
* Tell the difference between services and technology companies. Thousands of desktop printing roadside shops does not mean we have inkjet printing technology
* Acknowledge that we don't have a certain manufacturing technology (eg. inkjet printing )
* Acknowledge that many, if not most manufacturing technologies are not going obsolete any time quickly and thus we can not 'leapfrog' into the next technology. Inkjet printing for example, is probably going to be stable for next few decades.
* Pledge a proper commitment to the development of a manufacturing technology such as Inkjet printing. This should be done by a prominent business house and with a good business case. The R&D outlay needs to be substantial. For example, Gilette company invested $200 million to develop the manufacturing technology for Mach3 shaving blades ( yes the ones we use regularly ). That is how much it takes.
* Stop the nonsense of joint ventures ( that just leads to screwdrivergiri ) and establish actual labs and R&D centres.
* The government should give tax benefits to companies for investing in manufacturing R&D. Most important!
* There needs to be a tracking portal specifically for manufacturing technology to see who is working on what. For example, is anyone working on inkjet printing technology ? If not, that fact should be recorded as well.

We can dream onlee :lol:

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Re: Indian Manufacturing Sector

Postby Adrija » 27 Apr 2021 16:03

^^ Thanks csaurabhji

Govt already provides tax benefits (150%) for R&D- both in-house and contracted

As you say, there is no silver bullet. There was a study done by the erstwhile Planning Commission (~in 2013) to "increase the R&D intensity of Indian industry".... so its not that the government is not aware of the problem (one has to only read Prof Kalam's books to realize the same), But for some reason our manufacturing class is happy to do trading/ "manufacturing services" (to use your term) than engage in genuine innovation ad R&D

In the US, while a lot of corporate research is done, the seed money for the basic research which is the basis of a lot of subsequent applied research still comes from the government (NSF, DARPA, etc) on which their government- academia- industry nexus flourishes. For many reasons, that will take much longer to mature here although one can see the emergence of such ecosystems in some (very) select areas

If one goes back in history, the emergence of industrial R&D in the US was basically the result of intense domestic competition accompanied by a strong tariff barrier (so "protected markets"), and yes- rampant IP theft from the advanced markets (same formula being applied by China currently, BTW, and which the US is complaining about.... history is full of delicious ironies :(( ).

Korea and Japan followed a slightly different route - heavy state support, including unlimited financial support via banks, to a select few players- Samsung's emergence as a world leader in semicon industry today is the result of three decades of unstinted state support. As an aside, equally, the similar state support for heavy engineering to Daewoo resulted in failure, so its not roses all the way......... japan's MITI "intervention plan" initially supported construction and de-prioritized electronics, IIRC!

Neither of these models are likely available to us in India. But the larger point remains- technology intensive manufacturing doesn't happen by itself, it does require explicit support and perhaps even active intervention by the government...

Any other suggestions please?

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Re: Indian Manufacturing Sector

Postby AshishA » 27 Apr 2021 17:32

Can anyone recommend any in depth and realistic opinions and books on this topic of how to make India a manufacturing and technological giant?

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Re: Indian Manufacturing Sector

Postby Adrija » 27 Apr 2021 17:49

Unfortunately there is no single book which I have come across on this subject AshishA-ji... but i would recommend Dr Kalam's books as a good place to start

As mentioned,GoI has done studies on this as well.. will try linking them here if those are online

Hope that helps

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Re: Indian Manufacturing Sector

Postby AshishA » 27 Apr 2021 18:28

^^ Dr Kalam's books are a gem. I have read several especially books like India 2020. But I believe since kalam's passing, there has been a lack of intellectual thought as to how India can tackle various problems it faces. I hope that our best minds can work on the problem and show us the way by writing books on the topic.

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Re: Indian Manufacturing Sector

Postby Adrija » 27 Apr 2021 19:36

Dr Kalam's books are a gem. I have read several especially books like India 2020. But I believe since kalam's passing, there has been a lack of intellectual thought as to how India can tackle various problems it faces. I hope that our best minds can work on the problem and show us the way by writing books on the topic.


AshishA-ji, I appreciate the sentiment, but if I may, and IMVVVVVHO- there has been adequate "intellectualization" already about what ails Indian manufacturing in general. The required steps are actually quite well known

Firstly, let's separate manufacturing growth into two distinct areas- manufacturing, and "indigenous" manufacturing

For the first, enough has been said about India being able to plug into GVC (global value chains). India under NaMo has done phenomenally well (revolutionary, in fact) in making India attractive for manufacturing investment (local and FDI) with its efforts in EoDB and taxation. What is missing is three areas-power/ energy cost( WAAAAY too high), contract enforcement/ judicial reforms, and the "softer" infrastructure part (clean cities, world class schools, vibrant nightlife, with all that it means).... not easy but necessary. The ironical part is that the only state which meets almost every of these criteria is a "dry" state (that matters, please take my word for it). The other two closest potential alternates (MH and TN) are under - shall we say- not so long term thinking governments. And the ones which are (KR, UP) suffer from other handicaps (port access, world class cities)

But India has no option except to continue its efforts for plugging into these GVCs IMHO- we are desperately in need of jobs and there is no other alternative

The policies required for indigenous manufacturing are different and need to focus on domestic IP and associated manufacturing. There I would rather go by the example of France/ DE than KR/ JP, with one toolkit borrowed from 1850s-1940s US/ current day China, and with the following steps in that sequence only:
1. Sharply and radically improving EoDB. Limit regulations to just five areas (OSHA, environment, taxation, standardization, IBC) and ensure universal application of all laws irrespective of size of firm (i.e. no MSME exemption- these just incent firms to remain small). Currently by some estimates (TeamLease study), a mfg unit in India has to adhere to ~ 90,000 regulations. In this regard, the current steps to dilute IBC need to be resisted and pushed back. Entry has already been liberalized so kudos to NaMo on that
2. Increase tariff protection to the domestic market- the NaMo government is doing this already, kudos are due
3. Strengthen industry-academia linkages. In this regard, I would be tempted to recommend abolishing UGC but I fear that is too radical a step to be accepted... so as an alternate we have to be satisfied with the R&D tax benefits which already exist and accept the slow evolution of the ecosystem
4. Industry upgradation schemes are an amazing offering. Many many kudos for that
5. Bring about the new labour laws into force asap
6. Encourage a local VC industry to emerge- this requires way too many steps so will refrain from laying it out... suffice that our tax laws are not written well for that (or at least, were not written well till FY 21- I have yet to go through the latest budget on that score so my info here may be outdated)
7. Amend the Companies Act to allow for differential class of shares- that is the primary reason why our entrepreneurs are forced to either migrate overseas and/ or sell out to deep pocketed foreign funds
8. Leverage the defense budget for local MIC- NaMo government has already done more on that front than all previous governments COMBINED. Progress is slow, but that is the nature of the beast... all I can say it that it continues

As you can see from above, we have made more progress in the last 7 years of NaMo government than in the entire period since 1947... NaMO is a blessing for this country... my only hope is he continues

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Re: Indian Manufacturing Sector

Postby AshishA » 27 Apr 2021 20:07

^That was a wonderful post Adrija ji. I had searched up this topic on internet but didn't find any articles which explained this topic properly. So thank you for making this topic clear.

One layman question. How do the major manufacturing powers of the world like USA and China fit into this? Partners or Hostile competitors intent on keeping their monopoly? How can we profit from them or if not keep them at bay from meddling too much?

Lastly, Narendra Modi must remain for next 10 years atleast. I am very optimistic that by the time he retires, India would have reached great heights.

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Re: Indian Manufacturing Sector

Postby Adrija » 27 Apr 2021 21:07

Thanks for that AshishA-ji...

IMHO and all that, China's position vs India is very very clear- its a rival and competitor. We have to be able to foil's China's gameplan on both fronts- attracting GVCs as well as building up our domestic capabilities... they are clear on that if one goes by their actions at least

Are we? Before Galwan I would say we were not... but now I have hope

USA is a bit more complicated issue. Please allow me a bit of a lengthier post, if I may:

Fact is that NO, I repeat NO, country in the post WWII era has risen to prosperity without having "preferential" access to the US market. That is a necessary but NOT sufficient condition. So USA's blessings in making India a moderately prosperous country (which I define as ~ USD 5k/ capita i.e. ~ USD 7 trn economy) is perhaps unavoidable IFF one goes by the currently dominant model (i.e. export led)

The question of course is- is that model (export led- largely to US) what India wants to do? That involves becoming a US economic colony (which, effectively, is what China largely is even now) giving up freedom of foreign and economic policy. In real terms, that means becoming an economic colony of the US for the next ~ 20 years at least - basically becoming a cheap manufacturing destination and ensuring a solid economic constituency of US Inc, a combination of Wall Street + Main Street (more the former than the latter, but even then both).

And a major unanswered question is: even if India were willing to adopt that model, is the US open to allowing that? Past conditions which incentivized the US to enable JP/ KR/ EU/ TW/ CN to adopt that no longer exist... US was engaged in what it thought was an existential struggle against communism/ USSR, and this was a grand bargain they offered ("stay in our camp and we will make you rich"). But now USSR is vanquished, but the Atlanticists either by instinct and/or being subverted by CN don't want to acknowledge that they have created a Frankenstein monster and that CN is the new enemy... witness Biden (who is an out and out Atlanticist) still charging against USSR / RU.

But EVEN if they do accept the new reality- that CN is now their primary competitor- the fact that they are willing to go by the old playbook and allow India that same bargain, may no longer hold true

The other growth model is that of FR (to some extent)- domestic led investment centered around your own MIC as an engine of growth, with exports being a side benefit. Or DE- export led but largely hi-tech mfg rather than mass manufacturing. The thing to note here is that their initial capital stock- the hardest part- still came from the US. AND, neither of them are anywhere near our scale, so the applicability of that model for us still remains an open question

Or should India do a third model- which ironically enough is actually the US model- domestic consumption led growth which led to domestic technology and innovation based on (as mentioned before) high tariff barriers and large scale IP theft. But is that model even open to us any more?
That requires national will for at least ~ 20 - 30 years which I fear we may not have... and we are missing the crucial ingredients thanks to the criminal neglect of basic infra investment by past governments (high literacy, cheap and universal healthcare, EoDB, locally available and cheap capital, etc).

The reason I say we don't have time for this model is that India is already in the midst of a demographic bulge... these should have been done (at the very least) a decade back... now if we adopt this hard route I fear our population may run out of patience...

Hope that helps. Please do let me know

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Re: Indian Manufacturing Sector

Postby AshishA » 27 Apr 2021 21:44

Adrija wrote:

Thanks for answering my question Adrija ji. I am saving all your posts for future use. Btw I had guessed that China would be the competitor and a hostile one at that. But US has always been a puzzle. How are we going to become a big power without some involvement of the US? Even if we could follow a non US approach to build ourselves up, how are we going to bypass the issue of dollars as the Global currency? Eventually we have to sell them products to earn those dollars.

I have a feeling that India needs a alternate economic system to that we currently have. Not capitalism or communism or some western ideas. Something suitable to our needs. Idk if it's even possible but one can be hopeful.

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Re: Indian Manufacturing Sector

Postby Adrija » 27 Apr 2021 22:10

FWIW, my guess is that NaMo is actually following the third model- India led growth, if one were to extrapolate from his actions, and also RSS vichardhara... that IMVVHO is also the correct model- neither capitalist nor communist but more centred around dharma and sustainable... consistent with our dharmic worldview that humans are a part of this srishti, not masters of it... we have to live in harmony with nature, not seek to subjugate it to our ends... which is why while all Abrahamic religions hold humans to be master of nature and seek to subjugate nature to the service of man, dharma is focused on disciplining the the mind to make it live harmoniously with nature... all our thoughts and endeavours are directed inwards... all western efforts and "progress" are directed outwards

We owe it to not just ourselves but also the world to demonstrate the viability of our model.

The challenge is that this Atmanirbhar model requires taking on both CN and US simultaneously in the short run, as this "independent/ ekla chalo" path is/ will be perceived as a threat to both- that is the real reason why US was trying to deny us the vaccine RMs. Only NaMo can pull this off, but will he continue to be around for the next ~ 20 years it requires to ensure sustained success of this outlook?

Even if we assume by the grace of Prabhu that BJP remains in power this entire period, NaMo will likely not be around after 2025 if he adheres to the 75 age limit... so we will be in for some tough times after that unless he ensures a stable and equally capable successor... or continues...

No easy answers

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Re: Indian Manufacturing Sector

Postby csaurabh » 28 Apr 2021 15:34

Adrija:

I had read Dr. Kalam's books.. as a student. It was inspirational. Now as an entrepreneur , I find them to be somewhat superficial. There is not any real discussion of manufacturing technology R&D ecosystem which is needed to emerge as a world power. They are more like self-help type of books. If any real analysis is done on manufacturing technology in India, I for sure have not been able to find it.

More than government policy it is also a cultural thing. When have you ever seen our top business people do more than pay lip service to indigenous technology. I can't speak for them, but what I observe is that they are trying hard to be recognized as a 'global elite', who are bringing 'global technology' to the Indian masses. Indigenous manufacturing technology is not really on their agenda as far as I can tell. Ironically it is the lethargic and poorly organized government that has done the most for technology R&D in this country. The private sector is otherwise more like Infosys Narayan Murthy - low cost arbitrage model rather than IP development.

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Re: Indian Manufacturing Sector

Postby Adrija » 28 Apr 2021 15:55

CSaurabhji,

Agree fully with all your sentiments, except:

More than government policy it is also a cultural thing


May I submit that all folks world over try to do the same thing- make easy money if easy money is on offer. And that is exactly what Indian elites have done... either through trading, "manufacturing services", labour arbitrage, or (quite a lot)- outright embezzlement.

But this is not something something unique to India

And perhaps nothing wrong with it provided you use that as a stepping stone to real innovation. But the sad part is that no elite has done that so far, as opportunities for easy money continued till very recently.

But that is now getting plugged, even in the face of rear-guard action by these elites (witness the ongoing attempts to dilute IBC). But as long as the current government remains in power, I am sure all these easy money options will continue to get plugged... perhaps not as fast as we would like but even then that is amazing progress

Once these enabling conditions get put in place (no easy money making, lower taxation, better logistics, more dynamic capital allocation, easier entry and exit, moderate but distinct tariff protection, etc- all of which the government is doing, we just need to connect the dots), then IMHO the conditions for increasing technological intensity and R&D necessity will become apparent. What today only a few firms such as yours are doing will become unavoidable condition to survive and flourish

IMHO of course

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Re: Indian Manufacturing Sector

Postby csaurabh » 03 May 2021 10:14

Adrija ji I wish I could share your optimism.
The issue is that our manufacturing class simply does not think or act in that way. If they are looking for a technology , they want it in 3 months, which can only be done via imports. The notion of funding research to develop a product in the time frame of 1-2 years is simply alien to them.
I disagree with you that the difficulties of manufacturing have been over intellectualized. In fact, the real issues have not been intellectualized at all. The only things we hear are typical baniya like complaints of land and labour issues, whereas the real problem ( lack of manufacturing technology ) is not even in the picture.
Let alone common people, even in BRF we are unable to call out the problem for what it is. Our intellectuals have no connect with manufacturing at all and derive their knowledge from reports written in EU/US. Our business people understand the business of manufacturing, but not the knowledge of manufacturing. The knowledge is imported.
To give an analogy it is like we know how to write essay, but the pen and notepad are imported, and most of the times the essay is also imported and we are just copying it. Then we sell the written essay for 10% profit and call it a business!
The notion of developing your own essay writing materials and techniques and being proud of your essay is simply a foreign concept to them, it is just about money.
This is why the notion of 'joint ventures' or 'collaborations' are nonsense, they are just an excuse for screwdriver-giri of imported products. A charitable viewpoint might be that they are starting with assembly work and want to learn and work upwards. They are wrong. You cannot learn manufacturing technology that way. The only way to actually learn it is to sit down and do the scientific research and manufacturing R&D. This is actually far less expensive than people think it is, but it takes a different way of thinking and a long time frame.

If people want I will share my thoughts on manufacturing technology and the way forward in a few long form posts.

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Re: Indian Manufacturing Sector

Postby Adrija » 03 May 2021 12:29

^^ yes certainly... please do so! Some tangible forward looking recommendations would be immensely helpful

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Re: Indian Manufacturing Sector

Postby kit » 03 May 2021 14:13

If i may put some suggestions

The easiest way for manufacturing is looking at the market from the consumer point of view ., do we have manufacturing bodies looking at ideas for products ?

Consumer electronics is something where some ideas can literally bring in a lot of products. The ideas are just so many to count . These are not highly sophisticated but maybe belong to the middle level category. Say for example GaN based phone/laptop chargers., this one item would probably make the other types redundant.
India has a highly skilled artisan pool able to make a wide range of products from figurines, baskets ..again list is too many.. enable them to be able to sell across the world by ensuring adequate transport and insurance
We need to look outside the country for markets and in doing so the products become competitive.

Logistics, Insurance, Trade fairs easy access to capital ., let the MSME s drive India s road to prosperity.

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Re: Indian Manufacturing Sector

Postby csaurabh » 03 May 2021 15:13

^^ The above post is typical of the rambling nonsense that passes for discussions on manufacturing.

I am talking about manufacturing technologies not consumer products.

Any product is the outcome of many manufacturing technologies.

Let's take a vaccine for instance. The glass vial that holds the vaccine is produce by blow moulding technology and the glass itself is produced by sintering chemical process technology that is controlled to give the required quality of product. The vaccine itself is produced by many chemical and bio-chemical processes ( unfortunately I don't know much about these ). The plastic/rubber caps of the vials are produced by injection moulding/vacuum casting technologies. The syringe that is used to give the jab is probably produced by blow moulding/injection moulding and the needle delivering the fluid is made by deep drawing of steel tubes.

Then there are assembly technologies. The vaccine has to be filled into the vials, the cap has to be inserted, a label has to be added which automatically prints batch number and date. Different parts of the syringe have to be fitted together. You may also need some inspection technologies to check if each vial is filled to the required capacity and things like that. These are typically done using machine vision, lasers, spectrometer etc. ( depending on the complexity and necessity of inspection ). Finally the product has to be packaged into cases/boxes for transportation.

The above are all manufacturing technologies. I am willing to bet that in the case of vaccines ( and most other things ), they are nearly all imported. It is not something special about vaccines, most of our industries are this way.

The level of indigenization, and thus flexibility and innovation is ultimately tied down by not having our own manufacturing technologies.

Hope the point comes across clearly. I think such detail of manufacturing technology is simply not discussed in this thread, at least not recently.

Shiv's thread in Mil forum is the only one which discusses the issues of manufacturing technology in details. It is a good starting point.
viewtopic.php?t=6387

P.S. GaN Phone chargers?? Really bhai? We don't even make silicon chips let alone GaN and that is used only for some specialized military applications. Plz know what you are talking about no?

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Re: Indian Manufacturing Sector

Postby nandakumar » 03 May 2021 17:42

csaurabh
I reproduce the following extract from your last post:
"The glass vial that holds the vaccine is produce by blow moulding technology and the glass itself is produced by sintering chemical process technology that is controlled to give the required quality of product. The vaccine itself is produced by many chemical and bio-chemical processes ( unfortunately I don't know much about these ). The plastic/rubber caps of the vials are produced by injection moulding/vacuum casting technologies. The syringe that is used to give the jab is probably produced by blow moulding/injection moulding and the needle delivering the fluid is made by deep drawing of steel tubes.

Then there are assembly technologies. The vaccine has to be filled into the vials, the cap has to be inserted, a label has to be added which automatically prints batch number and date. Different parts of the syringe have to be fitted together. You may also need some inspection technologies to check if each vial is filled to the required capacity and things like that. These are typically done using machine vision, lasers, spectrometer etc. ( depending on the complexity and necessity of inspection ). Finally the product has to be packaged into cases/boxes for transportation."
Which of the technologies that is uniquely difficult whether in the context of Covid vaccine manufacture or elsewhere that we don't already do? For instance you speak 'inspection technologies' to check if each vial is filled to the required capacity. Now aren't we doing it for whatever injectibles that we are producing by the millions that Indians take not to mention the vaccines that are administered to the vast population of cattle/poultry? Not a rhetorical question but genuinely perplexed to seek answers.

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Re: Indian Manufacturing Sector

Postby csaurabh » 03 May 2021 20:18

I don't have a first hand knowledge about pharmaceuticals/vaccines industry but I can take a few guesses.

In such a system there are parts which are easy and parts which are hard.
Glass vials are probably some of the easier stuff. That said, there were articles last year that the raw materials for this quality of glass is imported from China. so who knows. Syringe needles are pretty delicate and I doubt we have the requisite metallurgy knowledge to make them.

The bio-chemical stuff is probably the hardest and depends on a lot of imported materials. I believe a lot of recent hold-ups were because of these. Unfortunately I don't now much about this part.

As for inspection technologies, the most common type for bottling plants is some type of strobe light synchronized with a machine vision camera and custom software. This is pretty sophisticated stuff - we don't make them in the country. ( We are currently developing systems like these )

Now if we are talking about scaling the production for a particular vaccine, there are limits that you can run into with the existing setup.
If you are setting up new production lines, there's all that added cost of capital- remember all these machines are being imported at massive cost.
If you want to repurpose existing lines, it remains a question of how far poultry-vaccine producing equipment can be repurposed for covid-vaccine production ( And also, are you not going to give any poultry vaccines for months? )

A lot of manufacturing is quite inflexible. As a general rule, the more efficient a manufacturing setup is, the less flexible it is. And vice versa.
The ultimate example would be like a cement plant, which can, at best, produce different varieties of cement. That's the limit of the flexibility.
I have really not much knowledge on how flexible pharma manufacturing is. Perhaps others could give some idea.

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Re: Indian Manufacturing Sector

Postby Adrija » 07 May 2021 10:32

CSaurabhji, I appreciate your drawing a difference between "manufacturing services" (to use your term) and manufacturing technology. However, may I submit that perhaps the former is also an equally valid route for India at this stage- it does lead to jobs immediately and in manifold numbers, and at least in some instances it allows for these companies to graduate to R&D driven product development subsequently.

Japan followed that route, and in India we see quite a few companies in the auto sector in particular which started with your screwdriver route but now have formidable in-house R&D which allows them to do product innovation e.g., Bajaj Auto, TVS, Tata Motors, Kalyani, Force...

I am not advocating only that route, but I would submit that India needs both- R&D driven manufacturing; and "mass" manufacturing, for the lack of a better word......... question is what all do we need to do to encourage both. I had listed out some steps the NaMo government has taken.. would be very productive if you could add/ amend to that list

Appreciate your views

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Re: Indian Manufacturing Sector

Postby Suraj » 07 May 2021 23:03

India is actually a major producer of vaccination syringes and ancillary supplies:
How India is leading in syringe production for Covid-19 vaccination
The world needed syringes. He jumped in to make 5900 a minute
HMD supplies other countries, e.g. Japan who are facing a shortage of syringes and had to discard vaccines due to it:
Indian firms ramp up syringe, vial production to meet global demand amid Covid-19 vaccine roll-outs

India also has a substantial capability to produce vaccine adjuvants and inputs due to its prior history in vaccine and generics production, though several generic drugs do depend on APIs imported from China - something the Govt is trying to reverse through the PLI scheme targeted at APIs.

E.g. recently Covaxin production was slow to start because its adjuvant was produced in the US and was blocked by American embargoes on vaccine raw material export. Between November and Feb, Bharat Biotech only produced 5m doses a month, much smaller than Serum Institute who were producing >60m doses a month of Covishield. However, BB collaborated with CSIR to replace the adjuvant with a locally developed option which has dramatically increased Covaxin production:
Bharat Biotech ramps up Covaxin capacity to 700m doses a year
Production raised to 15m in March, 20m in April, 30m for this month, intended to rise to 60-70m by July, and potentially 100m/month in September.

This is a good example of removal of supply chain issues enabling scaling up of an entirely domestic vaccine IP.

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Re: Indian Manufacturing Sector

Postby csaurabh » 12 May 2021 17:26

I finally got the opportunity to put my thoughts into words on account of lock down and our activities are temporarily paused. So here is the promised multi part series on my thoughts on manufacturing technology in India.

----- PREFACE - Method of thinking --------------------

I begin by briefly explaining my method of thinking as a form of 'land power thinking'. In ancient times, there were two kind of powerful states in the world- Land powers and Sea powers. Land powers draw their strength from the land, in a matter of speaking. It is deeply entrenched among the masses in the culture and society. Sea powers on the other hand, derive their strength in a completely different way. The sea provides connectivity, thus trade and opportunity for networking. This network being so powerful, that some cities became rich just by being gateways into the network. The classical example of a sea power was of course the Roman empire. The network of closely linked Mediterranean cities made it possible for Rome to develop a powerful military and conquer land powers such as Celts, Gauls and so on. Later on, they got too confident and were overthrown by other land powers such as Visigoths, Huns, etc. This is repeated in the colonial era - the sea power (Britain ) initially conquered all the parochial and feudal land powers, but later the British rule was overthrown by popular mass movements demanding independance such as the freedom movement in India.

Sea power elites therefore think differently from land power elites. They put a considerable effort into building and maintaining a network which in turn maintains their power. They do not care what the masses think ( unlike land power elites ), they care about what other people on their network think. So long as they can control the flow of information and the discourse, they are fine. In the political domain, we can think of the Congress-left ecosystem as a sea power. They draw their support from overseas, the western academia, NGOs, think tanks, Ford foundation, the Washington Post, Greta thurnberg, etc. etc. They are perfectly comfortable with calling the masses as fascists, communalists etc. because it gets them ahead in their network. Nowadays we call such people Lutyens elite ,Khan Market gang, eminent historians and so on. But before 2010s, they were not called these things. It was seen as the default and essentially only discourse on India. What happened in the last decade is that their monopoly on discourse was broken by a land power ( the BJP and its allies ) due to social media and other things. Of course, the BJP and their allies have been attempting to create an international network/ecosystem of its own. This is an example of a land power acquiring some characteristics of a sea power. I need to also clarify here that land power elites have problems of their own. Being cut off from the network of power and information leaves you blind to many things and makes you ignorant and parochial. Akhilesh Yadav's declaration of covid vaccines as 'BJP vaccines' is a manifestation of this trend. Land power thinking should not be confused with ignorant thinking. The ideal balance is to be on the network, yet not of it.

I will give you an example of sea power thinking which I have personally experienced. While I was at IIT Kanpur as a student, no one was concerned about the industry in Kanpur, the problems of the people in the city or countryside , or even India at large. (Side note, I believe things have changed now and it is not that bad ). It was all about getting on to the MNC/Western university bandwagon. The professor or institute staff would put considerable efforts into maintaining their 'contacts' with foreign universities/MNCs but nothing into their counterparts at other IITs let alone Indian industries and SMEs. And old joke is that the academics of IITs would meet each other only at conferences in Berlin or New york. Otherwise they did not even know each other or what they were doing. The IITs (at least at that time) were essentially the equivalent of a port city of a maritime world. They provided access (portals) through which one could get on to the real power network which was essentially in the west. After graduating and doing various other things over the last decade, I have come to see the IITs as essentially irrelevant in the technical development of the country although things are slowly changing and they are at least trying to be relevant these days.

While in the political sphere the power of sea power elites has been comphrensively broken ( or at least challenged ), the same is not true in the domain of technology, research and development, academia. When asked the question of why aerospace (as a high tech example ) manufacturing is doing poorly in India, our instinct is to seek the answer from abroad. We want to know what MIT technology review says, what Elon Musk says, what Bill and Melinda Gates are thinking, what policies are made by World bank and IMF. We study what Singapore is doing, what Israel is doing, the South Korea Model, China Model, etc. etc. We talk incessantly about AI, ML, 5G , blockchain, IoT, etc. because these buzzwords are what is popular. No one asks a lowly production manager at HAL or ISRO about what exactly are the problems in their manufacturing ecosystem. We simply assume that they are incompetent bums who cannot deliver. They cannot possibly have anything important to say. Part of the problem with this discourse is that we have developed very few intellectuals who can talk knowledgeably from the ground level about the actual manufacturing ecosystem in the country. For the most part we have outsourced our thinking to the west, and the few so called leaders that we have are either beholden of this sea power elite network anyway (think Rahul Bajaj) or completely baniya-like businessmen who understand profits but nothing beyond that ( think Ambani ). This essay series is therefore my humble attempt to intellectualize the difficulties of modern manufacturing from an indigenous or land power perspective.

I am indebted to Prof. Milind Sohoni of IITB who heads CTARA (Centre for Technologies in Rural Areas) who in addition to his work writes several essays on what the real problems of technologies in rural areas are like and why foreign funded agencies like Bill and Melinda Gates foundation are consistently wrong about them. Shiv ji of our own BRF has indicated his own thoughts on Industrial development and military aviation in the thread linked earlier.

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Re: Indian Manufacturing Sector

Postby nandakumar » 12 May 2021 17:51

csaurabh
This is an interesting perspective. Looking forward to reading more on your line of thinking. My quick reaction is this. We need grass roots level problem solving approach while at the same time looking at issues from a height. Let me think about it some more and come back to this thread.

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Re: Indian Manufacturing Sector

Postby csaurabh » 12 May 2021 19:34

----- Part 2: The era of modern mass manufacturing -------------

The modern era beginning in the 1800s in Britain is essentially a product of a manufacturing revolution - the first industrial revolution. During this time, artisanal/ad-hoc manufacturing techniques were replaced by modern mass production. They made it possible to make vast quantities of good affordable to the masses as well as newer products that were the result of scientific and industrial research.

The methods of mass manufacturing were first pioneered by Eli Whitney in the manufacturing of rifles for the US army, the assembly line and processes by Taylor and flexible assembly lines were developed by Knudsen in 1930s. Of course I am summarizing here - a vast network of inventors, engineers , scientists and managers had developed which could design, develop and roll off mass quantities of products off the assembly lines in factories. The output of this network was staggering - during World war 2, the US produced over 300,000 aircraft and 5 million trucks. This network was already long established before the birth of modern Indian nation.

I put this in context of a country like India that was still primarily a peasant/agricultural society. After world war 2, we got independence, but we still had no clue about the vast knowledge base and network needed to sustain mass manufacturing. We had leaders like Nehru, who imported ideas about 'socialism' and 'rights' but had no clue about actual manufacturing processes. He saw it as some kind of baniya activity in pursuit of profits, and he was not wholly wrong about that. And in general, we as a people had no idea about modern manufacturing. Of course we had 'castes' that would make a small amount of products by hand in small workshops. But not factories where vast numbers of people worked together or the scientific and engineering institutes that researched and designed these products.

Later, after Nehru, we had the license raj era. In this period, what mattered was getting a license to produce small numbers of sub standard products. In this way a low growth rate and barely functioning manufacturing sector was thus maintained through crony capitalism.

After 1992, we had the economic reforms. This enabled us to modernize rapidly but along the way something else happened - the IT boom. The huge boom in IT outsourcing sector meant that the vast majority of talent was sucked into the services sector and away from manufacturing. People in the late 90s would remember that the discourse was all about how we were living in a 'globalized' world without boundaries, and how we were able to provide affordable 'IT services' and that would be our main contribution to the world. Of course it didn't turn out that way, but the damage was done. It took until 2015 until the 'Make in India' program was launched that finally focused back on manufacturing. Since then we have proceeded in fits and starts. We still rely on outside organizations to tell us what our problems are and have not been able to come up with indigenous narrative to fix the problem by understanding it from first principles. This is what I propose to do here.

What is manufacturing?

Simply put, it is the ability to create a product from raw materials through manufacturing processes. These processes include:

Forming processes: These are processes for shaping a material through heat, pressure and chemical changes. Examples include casting, moulding, blowing, forging, stamping, drawing and so on.

Machining processes or subtractive manufacturing: These remove a certain amount of material from a blank according to the geometry of the part desired. Examples include laser cutting, punching, plasma cutting, grinding, turning, milling, boring, electron discharge machining, etc.

Joining processes: The process of creating a part through assembling or joining other parts. Examples would be bolting, riveting, welding, brazing, gluing, soldering, etc.

Additive manufacturing: A process for creating a part by adding material in the required geometry. Relatively new, this also goes by the generic name of 3d printing.

Finishing processes: These include electroplating, coating, painting, varnishing and other such processes that give the required surface finish to the product.

Of course it bears mentioning that any product or even part of the product would go through any number of such processes for it to be manufactured. A ball bearing for example, would first create spherical balls through droplet casting, then coat the balls with a thin layer to give it required frictional properties, then the balls would be assembled together with the races ( which may be made by casting and turning ), and sealed with grease.

A point to be noted here is that traditional or hand made products follow the exact same processes. A carpenter would form the material (wood) into planks, then cut the wood to a desired shape, apply coating (varnish), then join the parts using screws and glue to give the final product. Hand making is still viable in some types of products where large numbers are not required or customization is needed, though power tools would now be used.

What then, is the need for modern or mass manufacturing?

It essentially comes down to two things- precision, and numbers. An artisan or craftsman could not make things with very high precision ( like having a tolerance of 0.01 mm ), nor could he do it in large numbers ( like 100s or 1000s ). Modern manufacturing is all about making repeatably, the same product ( to a given specification and precision ) and in large numbers.

To do this modern manufacturing, we therefore require machines.
The nature and economics of these machines will be discussed in the next section.

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Re: Indian Manufacturing Sector

Postby m_saini » 12 May 2021 23:11

Very Interesting CSaurabh sir, waiting for the next section.

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Re: Indian Manufacturing Sector

Postby Suraj » 12 May 2021 23:47

csaurabh, you're posting in the wrong place. That is a tremendous piece of writing that needs to be compiled into a thread on the strat forum at the very least, if not into an article on a major site. I'll split off your posts into a dedicated strat thread if you're ok with it.

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Re: Indian Manufacturing Sector

Postby Kakkaji » 13 May 2021 06:15

Cabinet approves Production Linked Incentive scheme “National Programme on Advanced Chemistry Cell Battery Storage”

The Cabinet, chaired by Prime Minister Shri Narendra Modi, has approved the proposal of Department of Heavy Industry for implementation of the Production Linked Incentive (PLI) Scheme 'National Programme on Advanced Chemistry Cell (ACC) Battery Storage’ for achieving manufacturing capacity of Fifty (50) Giga Watt Hour (GWh) of ACC and 5 GWh of "Niche" ACC with an outlay of Rs.18,100 crore.

ACCs are the new generation of advanced storage technologies that can store electric energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required. The consumer electronics, electric vehicles, advanced electricity grids, solar rooftop etc. which are major battery consuming sectors are expected to achieve robust growth in the coming years. It is expected that the dominant battery technologies will control some of the world's largest growth sectors.

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Re: Indian Manufacturing Sector

Postby Najunamar » 13 May 2021 08:32

csaurabh wrote:I don't have a first hand knowledge about pharmaceuticals/vaccines industry but I can take a few guesses.

In such a system there are parts which are easy and parts which are hard.
Glass vials are probably some of the easier stuff. That said, there were articles last year that the raw materials for this quality of glass is imported from China. so who knows. Syringe needles are pretty delicate and I doubt we have the requisite metallurgy knowledge to make them.

A lot of manufacturing is quite inflexible. As a general rule, the more efficient a manufacturing setup is, the less flexible it is. And vice versa.
The ultimate example would be like a cement plant, which can, at best, produce different varieties of cement. That's the limit of the flexibility.
I have really not much knowledge on how flexible pharma manufacturing is. Perhaps others could give some idea.


With all due respect Csaurabhji, even for the glass vials there's a lot of innovative stuff - https://www.corning.com/worldwide/en/in ... cines.html is a good read.

Having such a vial would probably reduce your quality issues, improve throughput and relieve the high pressure I am sure the vaccine plants face in the current situation.

As regards Pharma manufacturing there is definitely less flexibility (based on working in an injectable recombinant drug manufacturing facility - not vaccine production), but the issue is mostly about maintaining a high quality level and reduce risk of pathogen/particulate contamination. Yield in filtration process (for biopharmaceuticals) is not a big concern as far as I know (as it is tackled well - have attended a few webinars to learn from others currently working in this field).

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Re: Indian Manufacturing Sector

Postby Atmavik » 13 May 2021 10:19

m_saini wrote:Very Interesting CSaurabh sir, waiting for the next section.



Very Interesting indeed.i hope you will cover the Auto manufacturing and if it has any lessons for defense manufacturing

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Re: Indian Manufacturing Sector

Postby csaurabh » 13 May 2021 16:48

--------- Part 3: Machines and their economics ----------------

In the previous section, we had covered what exactly manufacturing processes are. Now we will cover what machines are and how their economics work.

A machine is simply a device that performs a manufacturing process. It can be said to be an embodiment of a certain type of manufacturing technology. This process takes some things as input and creates something as the output. We usually call the inputs as raw materials and the outputs as products. But of course, the 'raw material' or rather the input may just be the output of some other machine, and the output may be the input to some other machine. It is a combination or network of manufacturing technologies and machines that produces the final consumer product, ie. the things you can buy on shelves or interact with.

For a specific example, let us take the example of a machine that I own - an Epson L380 desktop inkjet printer. We usually think of printers as office equipment rather than manufacturing machines, but in fact that is exactly what they are. The machine ( Epson L380 ) is an example or manifestation of a certain manufacturing technology ( inkjet printing ). This takes three things as inputs - paper, ink and a certain type of data ( the 'image' being printed ), and produces the output as a printed page. The inputs - paper and ink are themselves products of other manufacturing processes ( of making paper from wood and inks from dyes and chemicals ). The output could be a product by itself, or it could be an input to another process or machine. For example, imagine that we are making stickers. After printing the images on sticker paper, we have to perform kiss-cutting to cut an outline around the image. Thus the output would be an input to a knife-based cutting machine, which would perform the kiss cutting operations ( which is another type of manufacturing technology ). An example of such a machine would be the Gerber GS 750.

There is another input here which is the 'data' that is being printed. This is essentially the design specification. We think of it as a digital data in the form of zeros and ones. In fact it is the data corresponding to pixels of what is being printed. Data usage is ubiquitous in modern machines. Even in very simple machines and products there is some kind of data being used. If we are making a cylinder on a lathe, the data required is the radius and length (and their tolerances). If we are making a complicated axisymmetric shape (such as a rocket nozzle) on the same lathe, the data would be very sophisticated and include hundreds of points. The data need not be just in digital form. A injection mould would contain 3D data ( the part geometry ) in the form of a physical object ( the mould ). The object created by this mould would thus have the same 'data' ie the geometry corresponding to the mould. The process of making this 'data' or design is done by designers. Nowadays this is done on computers using software but really there is nothing specifically 'computerized' about it. In earlier days it would be drawn by hand. The designs ('data') of the Boeing 747 made in the 1960s are stored in 74000 files - all drawn on paper. We could not make the Boeing 747 because we a) did not have the design knowledge to make this data , b) did not have the requisite manufacturing technology to be able to make the product from the specification. It was not because of a lack of computers. I point this out specifically because it seems to be a fashion nowasays to keep bringing up digitization and computers as a solution to everything.

I mentioned inkjet printing to start with because this is a type of manufacturing technology that is usually familiar to us and we use it (even if we don't think of ourselves as 'manufacturers' of printed products). But everything we use is a product of manufacturing processes. Let us take the metal plates and cutlery we use at home. These are made using stamping and die cutting processes using hydraulic presses and moulds. The input would be sheet metal (aluminium or stainless steel) and a mould which is made of hardened alloy steel and in the shape according the item we want to make. The sheet metal would be heated to a certain temperature using an oven, then placed in the mould and stamped/cut into shape using the force of the hydraulic press.

One might ask the question of why we do not keep manufacturing technologies at our house to make steel plates the same way we keep desktop printers to make printed pages. The answer is not that these machines are too large to fit in your house ( they aren't, if you have like a medium sized bungalow ), nor is it that we lack the knowledge to use such machines ( they are fairly simple to use ). The reason is simply that we do not need steel plates in such large numbers in order to justify the purchase, maintenance and operations of such costly manufacturing equipment. If we did in fact manufacture these steel plates in such large numbers, we would need to sell them to large numbers of other people (ie. not ourselves) using a sales and distribution network. This in fact, is exactly what a small factory or 'MSME' is. The people who run such operations are called 'manufacturers'. I would call them as providers of manufacturing services. They are only a small part of the manufacturing ecosystem. It is understood that these people are professionals. No one in India does these things as a hobby or part time activity.

Often, a single small factory (think the size of a small bungalow), would only have one or two types of machines and would not by themselves be able to make the entire product. They would have to take the help of other small factories which have different machines. Let us say that for doing sheet metal work you need not only hydraulic presses and ovens but also press brake/bending machines, metal spinning machines, welding equipment, powder coating guns, electroplating machines. A combination of these small factories ( or 'MSMEs' ) would thus be able to produce the product you wanted. This is how an industrial cluster comes into existence, such as Adityapur in Jamshedpur or Peenya in Bangalore. But these MSMEs can't produce large products or complicated products that have hundreds or thousands of components. They have a relatively narrow point of view. A person owning a gear cutting machine may understand gear cutting, but not much else. Furthermore, in the Indian context, he may not even understand gear cutting properly. He would not understand the nuances of gear metrology , case hardening and material science. These activities are generally done by traditional bania 'castes' who have a dislike for studying engineering or research. They rely on some kind of backroom wheeler-dealing and dodging taxes, not on understanding of manufacturing technology. I am generalizing a bit here but the capabilities of our MSMEs are not comparable to those of Germany or Japan. Else, we would not be importing such things linear guideways and rack-and-pinion gears.

However when given precise instructions ( assuming they are willing to take the effort ), I have found that they are reasonably competent manufacturers. This knowledge is provided by large organizations such as an automobile OEM, or in aerospace context it would be HAL or ISRO. These act as system integrators for the multitude of products produced by these MSMEs. They are also the designers of the complete product which may have these 100s or 1000s of components and manufacturers of some specific things that cannot be done by MSMEs. This is what is called as a supply chain.

The economics of the supply chain and its working in the capitalist framework will be discussed in the next section.

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Re: Indian Manufacturing Sector

Postby csaurabh » 13 May 2021 16:56

Najunamar wrote:With all due respect Csaurabhji, even for the glass vials there's a lot of innovative stuff - https://www.corning.com/worldwide/en/in ... cines.html is a good read.

Having such a vial would probably reduce your quality issues, improve throughput and relieve the high pressure I am sure the vaccine plants face in the current situation.


Quoted from the link

The three core technologies are the focus of the work of Corning’s scientists. The company spends nearly $1 billion a year on research in glass science, ceramic science and optical physics. That work, and more than 160 years of experience, allows the company to have confidence that it is a world leader in knowledge about glass.

Similarly, investment in four manufacturing technology platforms – called vapor deposition, fusion, precision forming and extrusion – means Corning can know that if it develops an innovative new glass product, the company can make it at scale.


This blew my mind just reading these paragraphs. For context, that's about 75% of ISRO's budget spent per year just by one company, just on R&D.
That folks, is what real investment into manufacturing R&D looks like. In comparison we look like confused amateurs, clowning around, expecting to achieve results by blabbering about AI and IoT.

--- Suraj: You can make a new thread in this forum for my posts. I think that would be fine.

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Re: Indian Manufacturing Sector

Postby Ambar » 14 May 2021 23:52

Even before it gets operationalised, the government has had to cut the output of its production-linked incentive (pli) scheme for IT hardware, which includes laptops, tablets, all-in-one PCs and servers, by half with manufacturers turning up with low bids. As a result, the utilisation of the outlay for the scheme will also come down by a similar quantum and export targets will take a big hit —from Rs 2.45 lakh crore over a four-year period announced earlier to a mere Rs 60,000 crore.

IT hardware manufacturers blame this on the low incentive structure which works out to an average of 2-2.5% over a four-year period which does not justify relocating units from China or Vietnam, especially for hardware products, where import duties are nil as they fall under IT products. The incentive structure for mobile phones PLI, which got operationalised in August 2020 and saw companies committing up to the maximum limit, works out to around 4.5% over a five-year period.

When the government had announced the IT hardware PLI scheme on February 24, the outlay was fixed at Rs 7,350 crore over a four-year period. During this period, the government had estimated a production of up to Rs 3.26 lakh crore, of which exports were expected to be of the order of Rs 2.45 lakh crore. Last week (May 4), when the government announced the names of the companies which have applied for the scheme, the production target was slashed to Rs 1.60 lakh crore of which exports would be of the order of Rs 60,000 crore. Since the incentive structure is based on achieving a minimum threshold of incremental sales over base year going up to a maximum limit, with companies committing lower production target only half the outlay of Rs 7,350 crore will get utilised.

Though 19 companies have submitted applications, the scheme will now make sense for only players which already have production capacity in India — Dell and HP, for instance. Here also it would be domestic sales which would be attractive for them rather than exporting which has been the main driving force for the government behind designing PLI schemes.

India’s import of laptops has increased by 42% –– from $2.97 billion to $4.21 billion –– in value terms, in the last five years. Around 87% of imports continues to come from China. In absolute terms, India’s dependency on China is very high –– it has increased from $2.83 billion to $3.65 billion during the last five years. For the year ending March 2021, India’s import of laptops is estimated to have reached close to $5 billion out of which imports from China would be around $4.35 billion.

As per estimates, the global market for laptops, tablets and desktop computers has grown from $229.38 billion in 2018 to $ 240.99 billion in 2019 and is expected to stabilize around $220 billion by 2025. Only six global players comprise 89% of the market shipments for laptops and 81% for tablets. The United States and European Union together represent more than 40% of the global market.

The global manufacturing hubs are limited to a handful of countries with China being the predominant supplier to the world 66% market share (2019); $100 billion in value).

Companies which have applied under category IT hardware are Dell, ICT (Wistron), Flextronics, Rising Stars Hi-Tech (Foxconn) and Lava. Fourteen companies have filed applications under the category domestic companies, which include Dixon, Infopower (JV of Sahasra and MiTAC), Bhagwati (Micromax), Syrma, Orbic, Neolync, Optiemus, Netweb, VVDN, Smile Electronics, Panache Digilife, HLBS, RDP Workstations and Coconics.


https://www.financialexpress.com/indust ... f/2250763/

I understand IT contributes over 10% to India's GDP annually, but it is hightime we reconsider low tariffs on IT hardware import. The sector is hugely profitable , so a meaningful hike in tariffs will not really impact their bottomlines much. It will also reduce the hardware imports and also incentivize hardware manufacturers to consider setting up plants in India to support India's domestic needs. Anything short and i don't think we will make any dent on China and Vietnam's manufacturing sector, especially not with incidents like Toyota Bidadi or Apple Wistron in Kolar.

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Re: Indian Manufacturing Sector

Postby csaurabh » 15 May 2021 12:28

---------- Part 4: Capitalism and the economy of scale --------------

We now need to understand a little bit about what 'capital' is. A capital investment is essentially an up-front payment for something that will give returns over a period of time. A car or a house is a simple example of a capital investment that we may be familiar with. The returns that the capital investment gives depends on it being used. A car that just sits there and is not used is not a good investment. Neither is an apartment in which we don't live ourself or give for rent.

The rate of utilization thus determines whether a given capital investment is good or not. If we are only using a car once a month, it's not a good investment. Better to take a taxi. Similarly if you need to change your location a lot, buying a house is probably not a good idea. It is better to rent.

The utilization of this capital also requires labour and raw materials. Let us say I make a capital expenditure (capex) into a kitchen buying various utensils, gas stove, refrigerator, etc. But this doesn't do anything by itself. I need some raw materials such as food-stuffs and I also need the time and skills to prepare a meal. Or, I can hire a cook to do this work. That is called as labour. Money spent this way is called operational expenditure (opex). Finally you could skip all this stuff and simply buy the completed meal at the restaurant.

I am 'winning' in a business sense, if the amount I am spending on capex and opex over a period of years is better than simply buying the completed product. What you may find is, that the returns are poor if you are just cooking a meal for yourself now and then. You are better off going to the restaurant. The returns get significantly better if a larger number of meals need to be prepared ( say for four people ) regularly. The capital investment on a kitchen would be better utilized for four meals rather than one. This is called economy of scale. Of course, there is a limit to the utilization of this capital. If you need to prepare meals for 100 people, then even multiple people cooking all day and all night won't be enough to meet the demand. You have maxed out the production of a small kitchen. The only way to increase production now would be to invest into more kitchens ie. capital expenditure.

Manufacturing business is exactly like this. For it to be profitable, it needs to be utilized to the maximum extent. And it can only be utilized if there is demand. If there is no demand and you are just producing, there is no point. Generally in the private sector we see a capacity utilization of 60-85% to be considered good . Government sector is more inefficent so 15-30% may be considered good for it.

You can create a demand by throttling the supply. This is what happened during the license raj era. If you have an exclusive license to produce scooters, and the production is limited to 100,000 scooters per year, then you are always in business. Because the demand is always much higher than the supply. This is how the country was maintained in a state of perpetual shortage an poverty under the guise of 'socialism'. Many people don't know this, but the big industrialists were strongest opposition to the 1992 reforms. Because their monopolies and crony-capitalist ecosystem was threatened.

Under the free market era, the only way to create demand is by aggressive marketing. If you ever wonder why countries like US and France constantly try to sell their military equipment to whoever they can regardless of their 'official' stances on 'human rights' or whatever, this is why. The same reason why you get barraged with ads everywhere you go. The demand must be kept up, otherwise the entire supply chain shuts down. This means job losses, unemployment and misery. Something to be avoided as much as possible.

The point to be made here is that capital expenditure is made under the expectation of return. The textile industry made big investments last year into the manufacturing of PPE. Why? because they knew that returns are guaranteed because of the huge demand caused by the pandemic. Contrast that with this year. Many people are asking why the vaccine production was not scaled up, why hospitals had not made arrangements for oxygen production, and so on. Fact is, these are all capital expenditure. We only know that there is a demand now. Back in January, there was a propaganda that the vaccines didn't work, or that they were 'BJP vaccines' or that the covid was basically over and there would be no second wave. They were wrong but we see that only in hindsight. If the govt had made big investments into these things in advance and then the second wave didn't happen, they would have been laughed at and called as corrupt people supporting Ambani Adani and other evil capitalists.

This is also why we need large orders for our defense equipment. It is the only way in which a large industrial manufacturing ecosystem can be sustained. The present government seems to get this better than the previous ones, but it is still not really enough.

Anyway, the demand side is just one part of the equation. Even when you get the order of 120 LCAs, you can't scale up your production to match that. Why? Because capital expenditure is costly and it takes time to set up. And one of the main reasons why capital expenditure is costly is because manufacturing technologies are imported. Not only that, but you are also limited in what you can do. The most advanced manufacturing technologies are -not- for sale.

Our manufacturing industry is thus styimed by two things - the inconsistent demand, and the high cost of capital expenditure due to imported manufacturing technology.

I will get into advanced manufacturing technology and the need for indigenization in the next section.

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Re: Indian Manufacturing Sector

Postby Rishirishi » 16 May 2021 01:16

[quote]Our manufacturing industry is thus styimed by two things - the inconsistent demand, and the high cost of capital expenditure due to imported manufacturing technology.[/quote

Sir most of old world Economic theory seems to have failed/proven invalid.

Take Capital for example. Previously Capital was scares, but today it seems as if capital is chasing good projects. Investments are always depending on expected future demand at a given price. For example Solar cells has not been manufactured in India, even if most accept that there will be a demand for them. That is because Potential Cell manufacturers do not know what price they will get in the future.

Now the government is now committing large projects condition to local manufacturing. Hence the manufacturer knows there will be a demand for the product, at a fixed price. But this is not sufficient to beat China. India must also make sure the manufacturers has the best competitive environment. China directs all factories to be build in clusters. This ensures competitive suppliers. In the case of solar cell manufacturing they could give even larger longterm projects, directed them to be placed in a cluster and also supplied key inputs like power at competitive rates. Sub contractors like glass and steel manufacturers should also be located in the same area. Very soon India would have the worlds most competitive Solar Cell manufacturing industry. The same approach can be used on other industries like electronics, textile, automative etc etc

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Re: Indian Manufacturing Sector

Postby titash » 16 May 2021 19:47

CSaurabh-ji,

Very nicely done. Manufacturing is close to my heart too. My first job + 11 years of my career in semiconductor manufacturing + some IT consulting for manufacturers.

Elon Musk I believe made a statement that "themachine that makes the product is more complex than the product itself" and that is correct. Investments in mechatronics 4 year degrees and mechatronic technician 2 year degrees are crucial to bridge this gap. The Dutch hi-tech industry did this successfully in the 70s and 80s in the industrial cluster near Eindhoven and the spin off was ASML etc.

For folks unfamiliar with semiconductor manufacturing, ASML is the Rolls Royce/Pratt & Whitney equivalent in this line of work. Again...driven by Mechatronics

Looking forward to the next post.

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Re: Indian Manufacturing Sector

Postby Atmavik » 17 May 2021 08:03

titash wrote:CSaurabh-ji,

Very nicely done. Manufacturing is close to my heart too. My first job + 11 years of my career in semiconductor manufacturing + some IT consulting for manufacturers.

Elon Musk I believe made a statement that "themachine that makes the product is more complex than the product itself" and that is correct. Investments in mechatronics 4 year degrees and mechatronic technician 2 year degrees are crucial to bridge this gap. The Dutch hi-tech industry did this successfully in the 70s and 80s in the industrial cluster near Eindhoven and the spin off was ASML etc.

For folks unfamiliar with semiconductor manufacturing, ASML is the Rolls Royce/Pratt & Whitney equivalent in this line of work. Again...driven by Mechatronics

Looking forward to the next post.



Titash ji,

What’s the state of semiconductor manufacturing in India? I hear that there is a global shortage. Does this create an opening for India ?

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Re: Indian Manufacturing Sector

Postby csaurabh » 17 May 2021 10:34

--------- Part 5: Advanced manufacturing technology and need for indigenization ------------

The examples that I have covered so far include relatively 'simple' manufacturing technology which can be purchased (for a price). But the modern manufacturing includes a lot of technologies that are very sophisticated and simply cannot be purchased. They are held within the company itself and the knowledge is strongly confined.

One example which many people here are aware of are turbine blade manufacturing technologies for aerospace engines. These technologies go under names like 'Single crystal blade' (SCB) and are some of the best kept secrets of the aerospace manufacturing ecosystem. Another example would be the 3D weaving technologies used to make fan blades for CFM-Leap engines. You simply cannot buy these manufacturing technologies.

Another one which may be common but not intuitive: Ball point pens. The nibs of these pens ( which contain the ball and its envelope ) are incredibly sophisticated in terms of its tolerance and fitting, and manufacturing them is no simple matter. When a Chinese factory put up the money and developed the machine for producing ballpoints, it was hailed as a great achievement for China. We have much lower standards for ourselves. We congratulate ourselves for producing PPEs or Holi Pichkaris, even though they are relatively simple products and are probably still made with imported manufacturing machines.

Many companies develop their own specialized manufacturing technologies. Gilette for example spent $200 M to develop the manufacturing technology that makes Mach3 shaving blades. They won't sell these manufacturing technologies to you because why would they? They'll just sell you the shaving blades.

Coming back to our inkjet printer, this is a very complex piece of technology that people may not realize. The head of the inkjet printer contains hundreds of little micro-nozzles placed just a few microns apart ( micron = 0.001 mm ). The manufacturing process for making this sophisticated and fine nozzle structure would be remarkable. The control of these hundreds of little micro nozzles to load up and squirt just the right amount of ink to print the right design while moving over the page is a fantastic work of engineering. I suspect this may actually be more difficult to do than launching satellites into space.

Needless to say, such technologies and knowledge are not simply available to anyone. It is held by only a few companies in this world.

It bears repeating that being an operator of such techologies does not really give you any insight into how they are made. You can run a desktop printing business all your life and still have no clue about how inkjet actually works. At best you can be a competent operator of these technologies. Maybe you can do basic maintenance. That's about as far as it goes.

This knowledge cannot be acquired by 'technology transfer' (TOT) or 'joint ventures'. At best what you can get is a deal to assemble some of their machines or products or be a vendor under the guise of 'collaboration'. A lot of the so called machine manufacturers of India are like this. They just assemble Chinese machines. There is only one way you can get them, and that is by developing a research ecosystem and doing actual manufacturing R&D.

It goes without saying our manufacturing industry totally dislikes this concept. And who can blame them. As a people we are accustomed to being users of foreign products. The armed forces use imported military equipment, the entertainment industry uses imported cameras, lights and accessories. And so on.

If we are serious about becoming a superpower or even aspire to be a developed country, this is what we need to start thinking about. Other than the aspects of economics and national security/ pride, we can easily see that all the advanced manufacturing technologies are located in developed and advanced countries. I don't think there is any country which became developed or rich by being dependent on imported technologies (barring some special cases like Saudi Arabia which exports lots of oil).

One might make the argument that we are just too far behind and we can't catch up now. I think this is too defeatist. We just have to look at the aero engine turbine blade manufacturing. A decade ago we would have said that Single crystal blade is too difficult. But HAL has done it now. In fact GOI has consistently delivered in areas where there has been the right people and the right amount of funding. Saying that we can't do it is just nonsense. It is actually the private sector which has let the country down by refusing to invest in R&D. It is the much maligned and poorly organized GOI that actually gets it right.

In the next section, we will cover the different parts of a manufacturing ecosystem and discuss how indigenous we really are.

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Re: Indian Manufacturing Sector

Postby Rishirishi » 20 May 2021 06:58

titash wrote:CSaurabh-ji,

Very nicely done. Manufacturing is close to my heart too. My first job + 11 years of my career in semiconductor manufacturing + some IT consulting for manufacturers.

Elon Musk I believe made a statement that "themachine that makes the product is more complex than the product itself" and that is correct. Investments in mechatronics 4 year degrees and mechatronic technician 2 year degrees are crucial to bridge this gap. The Dutch hi-tech industry did this successfully in the 70s and 80s in the industrial cluster near Eindhoven and the spin off was ASML etc.

For folks unfamiliar with semiconductor manufacturing, ASML is the Rolls Royce/Pratt & Whitney equivalent in this line of work. Again...driven by Mechatronics

Looking forward to the next post.


I was fortunate to be part of a political delegation (not Indian) to Eindhoven, to see how they had transformed from Electronics to high tech. We were taken to the old Phillips buildings and also a dude from ASML to present his company.

The greatest take from an Indian perspective is the emphasis of Quality of life. All people want to live in a nice place. The smart people can pick and choose, so it becomes important to have a good atmosphere. Interesting cafe's, parks, sports facilities, good public transport etc.

Back in India we see that almost "everyone" smart wants to leave. Even people with billions are sending off their children to other countries. So India is losing its smartest people and the capital. Hopefully new smart cities will address the problem.

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Re: Indian Manufacturing Sector

Postby csaurabh » 20 May 2021 12:06

Well the quality of life is reasonably good in India's gated colonies and enclaves ( including public sector companies/orgs ). But that is only one part of it. The other problem is that smart people want engineering jobs that are challenging and aspirational. They want to be part of a big story. Our private sector has never tried to do anything big and audacious. They stick to their safe and simple ways and baniyagiri.

No one 'smart' wants to work for some idiot baniya assembling Chinese goods for his 10% profit. That is not aspirational. As long as they don't change their ways, I don't see any letdown as far as the brain drain goes.

Ambani is classic example of the baniya ways. He spends 1000s of crores on mansions but not a paisa on development of indigenous telecommunications technology. So we have telecommunication 'services' companies like Reliance but no actual telecommunications technology, they import it from Huawei, Sony Ericsson or whatever. This in a country which has traditionally had a strength in RF and communication thanks to ISRO, DRDO, etc.

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Re: Indian Manufacturing Sector

Postby Atmavik » 20 May 2021 20:57

csaurabh wrote:They want to be part of a big story.


That sums it up. I do it-vty but still want to be part of something big.

I was on a linked in call with 4 students on their way to whorton MBA, very bright , but sadly their future will be outside India.

@csaurabh ji, excellent writing on a topic which is very important but hardly discussed. I would however recommend to go easy on the ‘banya’ reference. it brings down the level of ur writing.

If anything we need more entrepreneurs. We need university professors who can become millionaires. We need engineers who run business, as u point out it’s the other way round.

This sadly will take govt policy and handholding.


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